Fear factor

In an attempt to mitigate the effects of the H1N1 virus, Beijing has toughened up on foreign travelers from Mexico, the US, and other countries with reported cases of the virus, also known as swine flu. Since the scare began this May, strict preventative procedures have been introduced, including denying visas, examining all airline passengers for symptoms – as well as sterilizing their checked luggage – and quarantining those with any possible exposure to the virus.

Frederic Dieudonne, finance manager for Yves Rocher China, was sitting too close to an infected person for the comfort of Chinese officials on a trip from Shanghai to Xiamen. Even though he was in a different cabin, he fell within six rows of a confirmed case of H1N1 and was duly quarantined. When officials arrived at his hotel one Saturday morning, they told him that he would only have to stay one or two days. In the end, he was detained in a sub-par hotel with 30 to 40 other passengers for five days. However, he was lucky enough to have some of his food requests accommodated and use a laptop with internet access to do work. 

Round-about route

Quarantines are not the only way the H1N1 policy has impeded travelers. Jose Gonzales Franco, a Boston University MBA student from Mexico, had to go to great lengths to get into China despite the official response to the pandemic. He had spent over US$30,000 to begin his MBA program in China this summer. Unfortunately, shortly after dropping off his visa application, the Chinese consulate in Mexico City was closed and evacuated, along with his passport.

Determined to attend his program, Gonzales got his passport back through unofficial means, flew to Houston for a visa, and then flew to Shanghai via San Francisco. In the end, the scare had cost him an additional US$2,000, 20 days, and a few grey hairs. "There was a lot of stress in just wondering what would happen," he said.

Beijing’s increasing caution – or paranoia – regarding health issues has added risk of quarantine to a long list of existing business hurdles. Five days spent out of contact in a flophouse in Wenzhou can mean a lost sale or the end of a budding business relationship. Even though he has done business in China before and will likely do so again, Franco said this experience has changed how he will prepare for his engagements in the country. "I definitely need to be more cautious. If the government makes a decision, there is no way to negotiate with them even though it will hurt a lot of people."

Yves Rocher has adopted emergency procedures in case of another health emergency, according to Dieudonne. During such crises, the company will suspend their usual inspections of cosmetic counters where their products are sold. The company has purchased a reserve supply of facemasks, and made preparations to allow employees to work from home.

The heavy-handed response of Chinese health officials has consequences for domestic businesses as well, with foregone travel bearing the brunt of the damage. Beijing’s five-star hotels sit at 48% occupancy, down 21% from the pre-Olympic buzz of a year ago and about 12% below expectations, according to tourism industry analysis by Minzu Securities.  During the height of the swine flu scare in June, the Asia Pacific Airlines Association (AAPA), a group of 16 major airlines in the region, reported a decline of two million passengers, dropping to 9.88 million from 11.83 million a year earlier. 

Unfair treatment

However, there is a degree of unfairness in the criticism China has received for its response. It is easy to second-guess the government now that the swine flu mortality rate has turned out to be relatively mild, but given the alarmist warnings of the World Health Organization, what was the alternative? It wasn’t H1N1’s mortality that was frightening, but rather the ease of its international spread. Draconian or not, China’s policy worked. The country has reported only 2,295 confirmed cases of swine flu. Neighbors Australia and Japan reported 21,109 and 5,022 cases respectively.

There is also an economic argument for the strong response. The World Bank estimates that swine flu depressed the Mexican economy by 2.2% in the second quarter. The bungling of SARS brought China its own health-related economic drop in 2003 as second-quarter GDP fell by 2.4%. About half of corporate travel managers said that SARS led them to cut back on travel, according to a National Business Travel Association survey. Some foreign firms evacuated their operations entirely.

In the current economic climate, Beijing could hardly afford to gamble on swine flu, or on its successors. Last month, for example, a new health scare emerged in Qinghai province, where a vicious form of pneumonic plague ravaged a small village. Fortunately, the town lacked an international airport, but it’s a safe bet that quarantines are here to stay.

Business travelers should therefore prepared: Pack the laptop and the scotch, and consider using a GPRS-enabled phone that can double as a modem should your hotel lack internet connectivity.